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India gets a new No. 7 IT services company as churn continues

India gets a new No. 7 IT services company as churn continues

Mint5 hours ago
Coforge Ltd is now the country's seventh-largest software services outsourcer by revenue as it toppledMphasis Ltd, reflecting the competition and churn in India's mid-sized information technology segment.
Noida-based Coforge, formerly NIIT Technologies Ltd, reported $442 million in revenue for the three months ended June 2025, growing 9.6% sequentially. Bengaluru-based Mphasis's revenue rose 1.6% to $437 million during the first quarter.
Coforge has jumped three spots in less than a year. It had nudged ahead ofPersistent Systems Ltd in September 2024, and overtookHexaware Technologies Ltd last December. Growth has slowed for Pune-based Persistent and Mphasis due to client and sector-specific concerns.
This is the fifth instance of a change in the pecking order in the country's $283-billion IT industry in less than two years, a period also marked by global uncertainties and caution among clients. Many of the changes in Indian IT's revenue ranking involved mid-cap firms.
Analysts at Kotak Institutional Equities expect Coforge will break into the top six, which generate at least $1 billion in revenue annually.
'We believe Coforge will exit FY2026, with a revenue run-rate of US$2 bn and on [a] ttm (trailing twelve months) basis by the June 2026 quarter. This is impressive against the backdrop of the industry slowdown where peers are struggling," said Kotak's Kawaljeet Saluja, Sathishkumar S, and Vamshi Krishna, in a 25 July note.
Mphasis ceded ground to Coforge after losing business from Fedex Corp, which is one of its oldest clients and accounted for 8% of its revenue. The company's revenue from logistics and transportation companies fell by almost half to ₹2,171 million (about $25 million) in the June quarter.
The big four of the information technology (IT) services sector include Tata Consultancy Services Ltd, Infosys Ltd, HCL Technologies Ltd andWipro Ltd, which together account for 26% of the industry.Tech Mahindra Ltd andLTIMindtree Ltd are the fifth and the sixth-largest IT outsourcers.
Coforge on a roll
At the heart of Coforge's growth is the 13-year software product delivery deal with Sabre, a Texas-based travel tech company with a deal value of $1.56 billion and signed in March this year.
The company's revenue also got a big boost from its biggest acquisition in May last year, that of Hyderabad-basedCigniti Technologies,a digital assurance and engineering services company. Coforge acquired a 54% stake in the company for $220 million.
Even investors are buying into the Coforge story. Its share price has almost jumped fourfold since May 2017, when Sudhir Singh joined as its chief executive, to ₹1,689.35 on Friday's close. By comparison, the benchmark BSE Sensex rose almost threefold to 81,463.09 points during the period.
Still, Coforge has its challenges.
For one, there was not much cheer on the profitability front as Coforge's operating margins at 13.1% were largely flat on a sequential basis in the first quarter of FY26. Another concern for the company is its free cash flow, or the cash left after operating expenses and capital expenditure. Coforge spent more money than it earned through its operations as negative free cash flow for the quarter totalled $21.5 million.
It is optimistic about a turnaround.
'I would expect quarter 2 also to be an equally robust quarter. And H2, just using that term for a third time, should also be a robust second half for us," said CEO Singh during the company's post-earnings analyst call on 24 July.
Mid-cap churn
Mid-cap companies stay neck-and-neck by revenue. Mint's April analysis revealed that the revenue gap between the seventh and the twelfth-largest IT outsourcers is about $600 million. Persistent Systems, Hexaware and L&T Technology Services ended the June 2025 quarter with a revenue of $389.7 million, $382.1 million, and $335 million, respectively.
At the same time,Sonata Software Ltd overtook L&T Technology Services Ltd to become the country's 11th-largest IT services provider.
Firstsource Solutions Ltd could be the latest to enter the Indian IT's $1-billion revenue club. The Billionaire Sanjiv Goenka-owned firm ended the January-March period with $250 million in top line, up 0.4% sequentially. If the company generates at least $250 million each in the rest of the four quarters, it would hit $1 billion in yearly revenue. Firstsource has yet to announce its results for the June first quarter of the current fiscal year.
Stability at top
While the mid-cap IT has seen frequent churn over recent years, the top order is intact. And it's likely to stay stable for some time as the difference in the quarterly revenue of LTIMindtree and Coforge is now $711 million–or about 60% Coforge's current Q1 revenue.
The pecking order at the top has been stable since 2018, when HCL Technologies Ltd overtook Wipro Ltd as the country's third-largest IT outsourcer.
Even though the second-largest Infosys Ltd and Nasdaq-listed Cognizant Technology Solutions Corp have been edging past each other, the rankings have not changed materially.
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